The Basics of Defining Market Value
When looking at commercial property you’ll come across a number of methods of figuring out value. The common method is to compare it against the value of similar deals. We need to be careful though when using this method exactly because unlike residential values, there aren’t as many comparables in commercial.
One of the best comparables you can use is the price per square foot method. Simply calculate the price per square foot and multiply it by the total square feet in the building. You’ll get the value of the building.
This method isn’t the best when you want to apply it to specific property but if you want to compare between two properties kudapoker located miles apart, it will work. Use this method to compare a 7-figure office building with a 30-unitapartment complex. The building is the taller of the two and will provide better investment returns than the apartment complex.
Another good value method is the cost per square foot. Simply figure out the cost per square foot and divide that figure by the total square feet in the building. The answer will be the value of the building. Keep in mind that cost per square foot is affected by the square footage of the building. Simply divide the square footage into the square feet, and then compare.
One last method we’ll use here is comparable sales. Simply look for buildings listed with real estate agents and check out how much they are selling for. Real estate agents are required to list the sales price of the buildings they list, so this will give you a good figure to compare against.
What you should now do is figure out what appraisal you need to do. Here, you need to look at the property, add any depreciation you have experienced as a result of weather or vandalism, subtract the amount you have spent on the property in the last 12 months, and then add about five percent until you find out what it’s worth. Then turn the property over to an appraiser and tell him what value it should be. He will do the work for you, and tell you where he thinks it’s worth. He should do a full appraisal, because your $100,000 property is going to cost him maybe $200,000, and he may end up needing more than $200,000 to sell it for. Unless you want to give him a loss, he probably won’t lose his estimation. It’s better to have a small loss now than a loss later, when you can’t get rid of the property.
If you use these methods you’ll usually find that you can accurately pick out the value of your property. You might even find out what it’s really worth. He can easily make a mistake if you have a trusted appraiser standing by. You can also tell the appraiser what kind of deal you need, and he can explain to you why he think your deal is good.
If you’re in the Gulf Finance business, you know that the appraisal can have a big impact on the loan you get, either giving you a better loan or killing your deal, or sometimes new homeowners think your appraisal is much lower than it really is. So make the big appraisal with the right appraiser and you can cut your loan or increase your sale price.